October 2021 | Shrinkflation Won't Fix It All

John O'Leary
Shrinkflation doesn’t work for SEMO Electric Cooperative and GoSEMO Fiber

by Sean J. Vanslyke - sean@gosemo.com

The daily fixed charge for electricity may go up about 10 cents per day before the end of the year. GoSEMO Fiber's television rates may go up about fifty cents per day at the beginning of 2022. Unlike retail companies, shrinkflation doesn’t work for SEMO Electric Cooperative and GoSEMO Fiber. We aren’t able to reduce the size of the candy bar to sell at the same price or reduce the number of days we respond to electricity and broadband outages. We are an essential utility services provider that operates 24/7/365. You expect us to be there for you.

For electricity, efficiency improvements and cost-containment measures have allowed us to keep the residential kWh (unit of energy) the same since January 2013. The cost per kWh remains at $0.08798. We are working to leave the kWh charge the same for 2022. The daily fixed charge provides the cooperative a way of recovering fixed costs such as transformers, line maintenance, line trucks, property taxes, fuel and tree trimming. These are necessary costs associated with keeping power flowing even if no electricity is used.

For television, network increases are simply crazy as there is no local control. The networks (content providers) have a great deal of power over the marketplace. We have held the price the same since we started offering TV services in February 2018. At some point, I expect people to move to streaming (television services) over the internet as the large players such as YouTube TV have millions of subscribers and more leverage to negotiate. For now, we expect the best way to move forward is to remove the GoSEMO bundle discount (a $10 or $15 discount if subscribers have two or three services). It doesn’t make sense to give a discount and raise rates. We don’t like bad news, but I believe transparency is vital. We hope to leave our internet and telephone prices the same.

In next month’s issue, I will provide more details. We are still working through a few processes. No one wants to pay more for goods or services. All organizations – even not-for-profits like SEMO Electric – need adequate revenues to cover necessary expenses. Our focus is to keep the lights on and fiber flowing for you in a prudent manner.

When I read business articles and watch the news, it’s hard to avoid inflation. When I approve bids or invoices at the cooperative, it’s hard to avoid inflation. Inflation is here. Shrinkflation will work for some organizations, but Team SEMO requires gasoline, diesel, healthcare, payroll taxes, insurance and a fleet of vehicles to operate 24/7/365. It’s part of our business. I am sure you are seeing the same at your home, farm and businesses. 

Book of the Month: “The greatest triumph in life is not competing and winning, but stepping into the arena and giving it your all. It isn’t easy or pain free. You may fall and fail. But it will make you feel alive. And it will liberate you to live In Awe.” In Awe by John O’Leary

Sean

Be smart. Act safe. #keeppushingforward

Vanslyke is general manager and chief executive officer of SEMO Electric Cooperative. The photo is Sean with John O’Leary. In 1987, John O'Leary was a curious nine-year-old boy. Playing with fire and gasoline, John created a massive explosion in his home and was burned on 100% of his body. He was given less than a 1% chance to live. 

Ps: October is National Co-op Month! We are proud to be a big part of the communities we serve with juice and fiber. We enjoyed helping host a mobile food bank in Advance, Mo. 

 

 

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